And Gable says the best way to avert further job losses in the mining sector is for Zambia to be price-competitive.

The kwacha’s volatility on the foreign exchange market has continued with the local currency enduring its worst performance in the last one month.

The world’s worst-performing currency this year depreciated to K13 to a dollar in the final week of September, but continued to remain sluggish at K12.52 per dollar, according to the BoZ.
Gable said the local currency was expected to come under pressure amidst continued volatility going into 2016.

“As we look into 2016, we expect another difficult year. The outlook for the US Fed, for global commodity prices, for China, for EM [emerging market] sovereign metrics – all are expected to generate periods of increased concern and risk aversion. So our general view is that the kwacha, along with other African currencies, will likely experience another year of volatile moves,” he stated in response to a press query.

“It’s been a difficult year across African currencies. Zambia’s near-50 per cent fall against the US dollar is the largest move, to be sure, but there are a number of countries that have weakened by at least 20 per cent this year. Indeed, across the continent, all but two currencies have lost ground this year.”

Gable said there was need for the government to find ways of broadening the tax base as a means to help stabilise the kwacha.

“We believe that a meaningful recovery in global copper sector will take some time, which poses a significant revenue challenge for Zambia. In these more austere times, it will be important to find ways to broaden the tax base to ensure a revenue stream that is less dependent upon the mining sector. In terms of expenditure, laser-like focus is required to get the most out of every kwacha spent, particularly in areas such as the public sector wage bill, so that there is still fiscal room for investment in infrastructure,” he added.

And Gable said the best way to avert further job losses in the mining sector would be to improve price-competitiveness for copper production as Chinese economic growth is expected to continue slowing.

“The best way to help avert job losses will be in helping to ensure as competitive environment as possible for copper production in Zambia. That means a reliable and price-competitive electricity supply will be one part of that answer, a more efficient transport solution for the export of copper will be another, and a regulatory and tax environment that is both globally competitive and stable across time so that mining companies can better judge the risk/return on long-term mining investments,” said Gable.